IMF backs NZ’s economic, fiscal policy approach

Confirmation from the International Monetary
Fund that New Zealand’s growth prospects have improved and
that its macro-economic framework remains sound is a welcome
further endorsement of the Government’s economic
programme, Finance Minister Bill English says.

As
the IMF notes in its concluding statement issued today, New
Zealand’s economic expansion is becoming increasingly
embedded and broad-based. It forecasts annual economic
growth will increase to about 3.5 per cent this year.

“It’s encouraging that the IMF has again noted that
our macro-economic framework remains sound and provides
policy space to respond to adverse shocks,” Mr English
says

“In particular, it concludes the
Government’s focus on returning to surplus next year will
help to preserve its favourable standing with external
creditors against New Zealand’s background of relatively
high net foreign liabilities.

“I also agree with
the IMF that New Zealand faces some risks, including
globally from any downturn in the fortunes of China and the
rest of Asia, and on the domestic front from issues around
housing affordability.

“As the IMF notes, the
Government’s steps to help alleviate housing supply
bottlenecks and the Reserve Bank’s measures to tighten
mortgage lending and to raise interest rates should help to
ease house price pressures.

“The Government’s
fiscal deficit reduction programme is also expected to take
some pressure off the exchange rate, as the IMF
acknowledges.

“So this latest report on New
Zealand confirms we remain on the right track to build a
faster-growing economy and to manage the global and domestic
risks that might come our way,” Mr English says.
“That’s important if we are to support more jobs and
higher incomes for New Zealand
families.”

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